Numerically speaking, 2020 has been the worst year for the travel industry ever. Well-known travel brands such as Aeromexico, Hertz Rent a Car and more have filed for Chapter 11 in order to "strengthen their capital structure". The total loss of profit for the global travel industry surpasses $1.2 Trillion.
Yet as bad as things are at the moment, it´s important to take a look at history and realize that the travel industry has gone through rough times in the past and has bounced back. It bounced back in the past, and it will bounce back this time as well. Let´s revisit history to realize that we will soon be back to where we were at the end of 2019.
September 11th, 2001
No industry suffered greater economic damage from the terrorist attacks of September 11, 2001 than the U.S. airline industry. Immediately after the attacks, travel demand in the US fell by more than 30 percent. In addition to directly causing a temporary but complete shut-down of the commercial aviation system, the attacks caused many travelers to reduce or avoid air travel, weary of a newly-perceived risk associated with flying.
Numerous airlines experienced financial difficulty after these attacks. US Airways ceased to exist, while United Airlines filed for Chapter 11.
The 9/11 attacks affected the confidence and sense of security of passengers. In order to restore this confidence, the TSA contracted more than 40,000 border patrol agents. Stricter methods of security were put into place at the airports.
It took about 6 years for airlines to recover capacity after the 9/11 terrorist attacks, which before the COVID-19 crisis, caused the largest decline ever in air traffic. This decline caused the loss of 62,000 airline jobs.
SARS outbreak, 2003
According to the WHO, The 2003 outbreak of SARS resulted in more than 8,000 cases and 810 deaths in 29 countries. In Asia, tourism fell between 20 to 70 percent in April 2003 (depending on the country) and leading to an estimated tourism revenue loss of nearly $15 billion. Once SARS reached Canada, it caused an estimated $1.1bn loss in tourism revenue (source: Conference Board of Canada).
Countries bounced back relatively quickly from the SARS outbreak. More importantly, lessons learned from SARS helped Asian countries prepare and manage the Covid19 pandemic´s impact on their economies.
Global Financial Recession, 2007
Though the cause of the Recession was the sale of sub-prime "junk" mortgages in the US, the recession effect trickled throughout the entire world. Airlines, hotels and casinos slashed work forces dramatically, collectively reaching a total loss of jobs of 144,000. U.S Airlines lost $24billion collectively, leading to a wave of bankruptcies, restructurings, and consolidation in 2010-2013.
In 2010, the sector rebounded strongly (international tourist arrivals grew by 7%) demonstrating the resilience of tourism demand. Since then, emerging markets such as India, China and Latin America have gone from making up 21% of outbound travelers to 41%. Hotels had to adjust accordingly. The average price of a hotel room around the world was 14% cheaper in 2009 than in 2008, according to the Hotels.com Hotel Price Index. In fact, a hotel room was cheaper in 2009 than it was in 2004. Rooms cost 13% less in Europe during 2009 than in 2008, 14% less in the United States, 16% less in Asia and 21% less in Latin America. On a side note, this past case study of hotel price volatility in times of crisis is exactly why travel companies are using Pruvo Revenue Maker
Part of the quick recovery can be attributed to the growth of Airbnb and low cost airlines, which made travel more accessible.
Swine Flu, 2009
Do you remember the last pandemic we had? As if the Global Financial Recession was not enough, in 2009 we became aquainted with H1N1. H1N1 was the first flu pandemic in 40 years. Countries affected by Swine Flu experienced a decrease in GDP between 0.5% to 1.5% during this pandemic. In Mexico, for example, the impact of swine flu on tourism became apparent as soon as this was announced, on April 24, but mainly over the following three weeks, when hotel occupancy fell to 10% (from 60% before the epidemic) in areas such as the Riviera Maya. When comparing occupancy ratios in coastal resorts in Mexico compared to mainland cities, it can be estimated that tourism fell around 45% in annual terms during the Q2/2009.
Though it´s difficult to attribute how much of the decrease was due to the Global Recession and how much was due to Swine Flu, countries began to recuperate pre-H1N1 travel numbers around 2012.
Conclusion
Though Covid19´s impact is devestating, it´s important to learn from the past in order to navigate through the future. The travel industry will bounce back, it´s only a question of how quickly. During these times, keep costs down, and focus on increasing profitability with risk-free tools like Pruvo Revenue Maker.